January 15, 2013

The Legal Aid Society of D.C. announced yesterday that it had received a $40,000 award in the form of leftover funds from a class action settlement.

The underlying case involved claims against a company that acquired consumer debt and then pursued legal action against the debtors. The company was accused of purchasing the debt with insufficient proof that the debt was valid and in some cases where there was evidence that the time-limit on the debt had expired, according to Legal Aid.

The company settled with plaintiffs, agreeing to pay each eligible resident $1,500 and not to pursue any debts purportedly owed by class members. The award given to Legal Aid, known as a cy pres award, came from settlement funds that went unclaimed or couldn't be distributed to class members.

The class action was handled by the Friedman Law Offices and the nonprofit Legal Counsel for the Elderly. According to Legal Aid, the organization was presented with the award on January 10.

"The receipt of the award is critical to our ability to continue the important work of our consumer unit – which focuses on combating abusive debt collection practices as well as helping families avoid unnecessary foreclosures," Legal Aid Society Executive Director Eric Angel said in a statement.

Cy pres awards have come under fire in the past, with critics contending that they can benefit lawyers and charities to the detriment of class members. The U.S. Chamber of Commerce was part of an advocacy effort last year to convince Congress to get rid of such awards.